LONDON (AFX) - Brent crude futures continued to tumble in electronic deals
after US weather forecasters on Monday predicted a milder than previously
anticipated winter, dealers said.
At 10.25 am, Brent crude futures for February delivery were down 1.43 usd at
38.64 usd/barrel.
In New York, benchmark February contracts were up 15 cents at 41.92
usd/barrel, also in electronic deals.
"Prices have lost their support (since Monday) after reports that the US
north east winter will be much milder than previously anticipated," said GNI-Man
Financial trader Kevin Blemkin.
This has removed pressure on dealers to build their heating oil stockpiles,
causing prices to fall ahead of this afternoon's US inventory results.
GNI traders predict a fall of 700,000 barrels in distillates, a small rise
of 50,000 in crude stocks and a rise of 500,000 barrels in gasoline inventories.
"We will be looking very closely at the distillate (which also includes
heating oil) result this afternoon," just incase the weather turns nasty again,
Blemkin added.
Despite Monday's sell-off analysts remain cautious in case there is another
change in US weather.
"... it's hard to accept the fact that seasonal demand couldn't still come
into play," said Fimat analyst John Kilduff, adding, there are two months of
solid consumption for winter heating supplies left for the US north east -- the
world's primary consuming area.
Separately, analysts noted that the so called "terror premium" will increase
in the run-up to the elections in Iraq on Jan 30.
Fimat's Kilduff noted the election will also provide an opportunity for
terrorist attacks on the oil infrastructure in Iraq as well as Saudi Arabia,
particularly as Osama bin Laden has praised the efforts of Iraqi militant Abu
Musab al-Zarqawi.
raki.kotak@afxnews.com
rak/ab
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